I recently spoke with a good friend of mine, an experienced entrepreneur who has raised capital, launched innovative technologies, and built up several teams. He’s also a consumer of legal services.
A technology/market “visionary” type, he often tries to keep his focus primarily on those specific aspects of his ventures, and has his team take direct responsibility for managing other things like the lawyers, accountants, and so forth. However, in this case several of his key “go to” folks were tied up in other projects – so he flew solo on a lot of these things, including working with a “BigLaw” firm on some operational matters.
(Note: As an aside, one of the major benefits of entrepreneurial success – whether it’s in the context of launching a tech venture or a new law firm – is identifying great team members and keeping them. Finding bodies to fill job descriptions is usually pretty easy. Finding smart, loyal, experienced people who have the personality and skill to thrive in a fast-paced, rapidly changing environment can be ridiculously difficult – whether your new venture has plenty of cash or not.)
My friend relayed his “BigLaw” experience to me and it highlighted what is, I believe, something of a paradox in the legal services business. A paradox that relates to some of the LPM deas we’ve been kicking around. I’ll explain.
We he first engaged this particular BigLaw firm he didn’t need really need access to hundreds of uber smart lawyers to mull over complex transactional issues or the threat an army of litigators. However, the suggestion of insider/preferred access to prime venture capital firms was alluring at a time when capital markets for startups was bone dry. That access never really materialized, but the firm became the default firm for routine transactional stuff.
We were talking through some nits involving a potential investment, and I suggested that we rope in one of his lawyers for some added advice.
“Good idea”, he says, “but it’ll cost us over $600/hour.” Yikes!
Then he fills me in on the rest. “A few months back I sent them up our terms of service to look through. They assigned me to another attorney for that. When I reviewed the work and noticed a few things I thought needed to be covered and weren’t, he told me that this wasn’t really his area of expertise and should pass it on to another attorney at the firm – and I was billed thousands for it.”
Now the paradox. At a time when many firms are working harder than ever to generate and maintain business, here is a guy who has (and should continue) to generate tons of interesting, profitable legal work, but he is being discouraged to do so solely by the cost and uncertainty and other inefficiencies associated with obtaining it.
He values the good legal advice, he knows where to ask for it, and he is happy to pay for it. However, the high cost and uncertainty involved in the delivery of the service has deterred him from engaging it. That’s a lost opportunity for both parties.
Entrepreneur complaints about lawyer practices before have been well addressed before. For example, “Top 10 Reasons Why Entrepreneurs Hate Laywers” is a great piece written by Scott Edward Walker of The Walker Corporate Law Group. The title may be a bit much – it may be a bit more accurate to say that it’s the practices the entrepreneurs take issue with, not the value of good legal advice itself – but many of the concerns are valid.
The tie-in to LPM is evident. Though not necessarily a primary driver LPM, it’s easy to imagine how some of project management techniques we discuss in Legal Productivity, the book, would’ve impacted my friend’s decision to buy some additional legal advice as opposed to forego it.
Embracing LPM techniques early on in a relationship can not only help streamline servicing the particular matter at issue, but also promote and encourage additional work in the future.
Dramatically reducing the amount of cost and “process uncertainty” associated with legal work can go a long way toward removing the obstacles otherwise holding back new business.